updated 5/17/2005 10:32:46 AM ET 2005-05-17T14:32:46

Staples Inc. said Tuesday its first-quarter profit rose nearly 27 percent, boosted by strong growth in its delivery business and a smaller gain in North American retail operations.

The world's largest office products company said net income for the February-April period rose to $159.4 million from $125.7 million in the same quarter a year ago, with sales rising 13 percent to $3.9 billion from $3.45 billion.

Shares of Staples rose $1.26 or 6.13 percent to $21.80 in premarket trading on the Nasdaq Stock Market.

Adjusting for the effects of a three-for-two stock split that took effect on April 15, last quarter's profit equaled 21 cents per share, compared with 17 cents per share a year ago.

Last quarter's result beat by a penny the consensus forecast of analysts surveyed by Thomson Financial, who on average expected a profit of 20 cents per share.

First-quarter sales grew 4 percent at North American stores open at least a year, driven in part by strong sales of high-end items like digital cameras and portable computers, while overall retail sales grew 9 percent.

Sales at the Framingham-based company's North American delivery business rose 17 percent to $1.18 billion, while international sales rose 19 percent to $549 million.

However, international sales were flat when comparing stores open at least a year, and chairman and chief executive Ron Sargent told analysts in a conference call that European sales were slower than expected.

But Sargent said Staples posted "significant market share gains" during the first quarter. Its chief North American rivals are Office Depot Inc. and OfficeMax Inc.

Sales exceeded expectations at eight stores opened recently in Chicago, one of the new markets Staples is entering, the company said.

Staples, an 18-year-old company with 1,695 stores, 65,000 employees and operations in 21 countries, said it expects 18 percent growth in per-share earnings in the second quarter, in line with the expectations of analysts who forecast a profit of 19 cents per share on average.

For the full year, Staples expects earnings at the high end of its previously forecast range of 15 percent to 18 percent higher than last year, in line with analysts' expectations for a full-year profit of $1.09.

Staples has recently begun several initiatives aimed at making shopping easier, and is emphasizing profitable copying services and products carrying in-house store brand names. Last week, Staples introduced its own remanufactured ink cartridges compatible with Dell printers.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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